Sensata(US:ST)2023-05-02 16:03Financial Performance - Net revenue for the three months ended March 31, 2023, increased by 2.3% year-over-year, with organic revenue growth of 4.7% after adjusting for foreign currency exchange rates and acquisitions [80]. - Operating income rose by $22.9 million, or 18.2%, to $148.8 million, representing 14.9% of net revenue, compared to 12.9% in the prior year [81]. - Reported net income for Q1 2023 was $86.4 million, with diluted EPS of $0.56, compared to $22.4 million and $0.14 in Q1 2022 [120]. - Adjusted operating income for Q1 2023 was $192.9 million, representing an adjusted operating margin of 19.3%, up from $182.5 million and 18.7% in Q1 2022 [120]. - Adjusted EPS for Q1 2023 was $0.92, compared to $0.78 in Q1 2022, reflecting strong operational performance [120]. - Free cash flow for Q1 2023 was $60.0 million, significantly higher than $11.6 million in Q1 2022, indicating improved cash generation from operations [122]. - Adjusted EBITDA for the last twelve months (LTM) was $914.5 million, compared to $903.9 million in the previous period [125]. Revenue Breakdown - Performance Sensing net revenue increased by 4.7% year-over-year, with organic growth of 7.0%, driven by contributions from both automotive and HVOR sectors [87]. - Automotive net revenue grew by 2.9%, with organic growth of 6.0% after adjusting for foreign currency impacts [88]. - Sensing Solutions net revenue decreased by 4.4%, with an organic decline of 1.5%, primarily due to market declines in the industrial business [89]. Cash Flow and Liquidity - The company generated $96.9 million in operating cash flow and ended the quarter with $1.0 billion in cash and cash equivalents [82]. - Net cash provided by operating activities for the three months ended March 31, 2023, was $96.9 million, an increase from $47.4 million in the same period of 2022 [130]. - Net cash used in investing activities decreased to $22.9 million for the three months ended March 31, 2023, compared to $90.9 million in the same period of 2022 [131]. - As of March 31, 2023, the total cash and cash equivalents held by the company amounted to $1,034.1 million, a decrease from $1,225.5 million as of December 31, 2022 [126]. Debt and Financing - Total debt, finance lease, and other financing obligations decreased to $3,991.8 million from $4,240.1 million at the end of 2022 [125]. - The net leverage ratio improved to 3.3 as of March 31, 2023, down from 3.4 at the end of 2022, reflecting a reduction in net debt [125]. - The company made a $250.0 million payment on the Term Loan during the three months ended March 31, 2023, and intends to repay the remaining balance of $196.8 million in the second quarter of 2023 [132]. - The company had $4.0 billion in gross indebtedness as of March 31, 2023, which includes finance lease and other financing obligations [133]. Shareholder Returns - The company plans to increase cash dividends to $0.12 per share for the second quarter of 2023, continuing to return capital to shareholders [82]. - The company paid a cash dividend of $0.11 per share, totaling $16.8 million, on February 22, 2023, and announced a quarterly dividend of $0.12 per share payable on May 24, 2023 [141]. - The company did not repurchase any ordinary shares under its $500.0 million share repurchase program during the three months ended March 31, 2023 [140]. Tax and Expenses - The provision for income taxes increased by $16.1 million, reflecting the rise in profit before tax and the jurisdictional mix of profits [103]. - Total operating costs and expenses were $849.3 million, slightly down from $849.8 million in the prior year, with SG&A expenses decreasing from 9.8% to 8.6% of net revenue [91]. - Interest expense decreased by $5.4 million, primarily due to increased interest income, despite higher interest expenses on the Term Loan [100]. Management and Controls - Management emphasizes the importance of non-GAAP measures for assessing financial performance and planning [111]. - Significant non-GAAP adjustments included $44.1 million for restructuring and transaction costs in Q1 2023 [120]. - The effectiveness of internal controls over financial reporting is inherently limited, providing only reasonable assurance under U.S. GAAP [148]. - Internal controls are subject to cost limitations, human error, and the risk of fraud, which may affect their effectiveness [148]. - Projections regarding the effectiveness of controls are at risk due to potential changes in conditions and compliance deterioration over time [148]. Legal Matters - The company is involved in various claims and litigation matters, but does not expect these to materially affect its financial results [150].